This is the Digital Strategy Call with host Brent Lollis and special guest Jim Schleckser bestselling author of "Great CEO's Are Lazy", columnist for Inc. Magazine and Chief Executive Officer of the Inc. CEO project.
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Jim Schleckser (@incCEOProject) joins @BrentLollis, founder of @Creative_State on The Digital Strategy Call. (https://t.co/sIWHaiwBvf)
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Announcer:
This is the Digital Strategy Call with your host, Brent Lollis, an award winning digital strategist to Fortune 500 CEO's and superstars like Garth Brooks, Taylor Swift, and American Idol mentor and Big Machine Records founder, Scott Borchetta. Our mission is simple, to help you navigate the warp-speed changes in the digital world and make you the undeniable leader in your industry. Today's guest is Jim Schleckser bestselling author of "Great CEO's Are Lazy", columnist for Inc. Magazine and Chief Executive Officer of the Inc. CEO project. The Digital Strategy Call is made possible by Creative State, helping you conquer your competition with world-class responsive websites, video production, branding, search engine optimization and social media. Go to creativestate.com or call 866-658-7423.
Brent:
Jim Schleckser, welcome to the Digital Strategy Call.
Jim:
Thanks a lot, Brent.
Brent:
So, tell us a little bit about your background, where did you grow up, where did you go to college, what did you study, kind of just tell us a little bit about you.
Jim:
No problem, well, we moved around a bit, so I've lived in East Coast, West Coast, California, New York, New Jersey, born in New Jersey originally, but we didn't stay there that much. Later went on and got a chemical engineering degree, mostly because I didn't know what to do and my father was a chemical engineer, which is why I think a lot of people go into that field. Only briefly practiced engineering, thankfully for the world, went out and got an NBA and ended up in sales and marketing and general management, spent most of my career, running various companies for people and then a few years ago, about 11 years ago, I started my own firm where we do management consulting, specifically coaching and advising CEO's of fast growth companies, called the Inc. CEO Project.
Brent:
And so, that project has been described as a firm that coaches CEO's to higher levels of performance using a structured methodology and regular peer group meetings. So, what differentiates the Inc. CEO Project from other similar organizations that provide support and resources for CEO's?
you know, it's hard as a CEO, it's a lonely job, so there are very few places you can go where you can truly get, when we get naked, if you will, and really expose what's going on in your business and get some quality unbiased feedback.
Jim:
Yep, you're reading my marketing literature there, that's good sign for me, so, we say there's three differentiators that we have around, kind of anything else you might contemplate doing as a CEO to develop yourself and, to be honest, the number of resources that are available to develop CEO's are pretty thin on the ground. I mean, an MBA doesn't do it, exec ed helps a little, peer groups really fit a unique and valuable spot to move your game forward as a CEO, so there's three components. One is, we're very selective about who we work with, so these are all fast growth, high performing CEO's, but with enough humility and coach-ability that they get that they don't have all the answers and that combination doesn't exist in every single CEO that you might run into. The second is the methodology, we do one-on-one coaching, but we also combine it with peer groups where they come together with eight of their peers, in a facilitated way, and facilitated is important, to work on the most difficult issues in their business and, you know, it's hard as a CEO, it's a lonely job, so there are very few places you can go where you can truly get, when we get naked, if you will, and really expose what's going on in your business and get some quality unbiased feedback. You can't do it with your board, you can't do it with the people that work for you, maybe you have a friend or two, but they're only gonna spend so much time with you, so this is a way to get extended focused time on improving your business, on a particular issue, and we meet regularly, so you come back to different issues as you progress the business. The beauty is, while you're working on your issue, the other members of the group are working in their issues and it's nothing to go to school on them, and model other high, so you end up with these models of what other great CEO's do and what I've seen is, the smart ones pick up the good moves of the other guys in the group, or the gals in the group are making, and they adopt them and make them their own. So, it's a really powerful way of moving your performance up and then the final one is this office is facilitated and advised by coaches, advisors, that have all run businesses before and that's actually quite unique as well. So, they're not, sort of, family psychologists that know the right questions and hope you come up with the answer, they actually have run businesses and they have some of the answers. So, those are the three differentiators, members, process and coaches and it fits a very unique space for helping CEO's move their game to another level, as a result of that.
Brent:
So, how did the partnership or the association with Inc. Magazine come about?
Jim:
Yeah, you know, the genesis of that idea came from me doing some work with a guy name David Thompson, he's actually no longer with us, but he wrote a book called "Blueprint To a Billion" and he talked about the .017% of all companies make it to a billion dollars from start-up, so it's an extremely rare event and in there, he said there were seven things that people that make it big, organizations that make it big have, and one of them, the one that resonated was, they have a big brother partner. They have somebody that they affiliate with that can bring them places that they can't get on their own that helps them on the path, kind of a symbiotic relationship and for me, that organization is Inc., so we worked for a number of years to establish that relationship and it's been a good and productive organization, a relationship for us and for Inc., for many, many, many, years now. So, they were trying to get at the same exact people we are, entrepreneurs that are trying to grow their business, using an educational vehicle, in their case it's conferences and seminars and the newsletter and the online resources and so forth. In our case, it's peer groups and coaching. So, it's something they would never do, but we're going after exactly the same audience for exactly the same reason. So, that's why the partnership makes sense.
Brent:
I see, so is the project only open to people with the title of CEO, or do you work with other C-level executives? Who's eligible?
Jim:
Yeah, we will work with a president or a CEO, but, at this point at least, it's really not open to a CXO or a CMO or CFO. I think that's a potential venue for us to expand in the future using a very similar methodology, but in the short term, we really focus on the top general manager of the business, president of CEO, depending on their structure and the titles they use. Those are the ones we're after. We can have the most impact, do the most good and we're the best at that, but I wouldn't rule out, let's call it a CXO model, at some point in the future, but today we don't do it.
Brent:
And so if a president or a CEO wanted to get involved, what is that process look like?
Jim:
Yeah, well the first one is a minimum revenue. We start at 20 million dollars of revenue. So, they need to actually, and there's a reason for that, because at that point, they have a real executive team, they have a group of people around them and they really have taken on the full blown CEO role. We've all done start-ups before, and we know that at three or four or five million dollars, you are CEO and fill-in-the-blank, maybe two other jobs, you know, chief salesperson and maybe part-time engineer or part-time accountant or part-time janitor, something else, but you're not really just a CEO and so that constrains our ability to help those people, but at 20-ish, that tends to change, and that's where we really, we engage, and we go up to over a billion dollars of revenue. So, the scope is quite large, but there is a minimum revenue number. So, that's the first one and if somebody was interested, they could hit our website and find out more about it at incceoproject.com or just schedule an interview and we would have, sort of a diagnostic and scoping interview with them to determine if we're suitable for them and they're suitable for us, and if that's the case, then we begin the process of moving them forward towards membership, but I gotta say, some percentage of the people that we speak with, it really kind of ends after that first conversation. It's not the right fit for whatever set of reasons. They're not the right fit for us or we're not the right fit for them and that's the membership and the quality and the nature of that membership is the most important thing to this and so we're very caution about who we work with. An interview would be the first step, interview is the first step.
Brent:
And so, once I'm plugged in and like you've said, you've done this for many years, what type of outcomes and results do you strive for and do you have a track record of achieving?
Jim:
We're focused on a couple of things. One, improving your business model to make it a more robust, reliable, repeatable business model and that could be pricing strategies, it could be market focused, it could be, a number of elements could go into that. The second one is the talent you have around you. We tend to work on making sure you have the right talent, upgrading that talent, improving the talent that you do have. That's part of how you're gonna make it on this journey and then the final one, actually the third one, is making sure that the processes and systems, how you do what you do, is designed to scale to the next level. You see in a lot of organizations that have to take a breath, stop their growth, invest in systems before they can go on and grow again and we try to get to that before it slows down the growth path and then the final one is we do worth with the CEO and how they engage in the business and how they spend their time in the business because that's actually a very high leverage component as well. So, those are the three, business model, talent, processes and systems and then how the CEO engages and our goal is, yeah growth, we're pretty growth oriented, that what we specialize in, but also profit growth. If you're a golfer, they say driving's for show but putting's for dough, for us it's revenue's for show and profit's for go, so we're very focused on improving profit over time and we've had a number of cases where it's taken, not tremendously different revenue based profit from two or three million dollars a year up to 10 or 12 million dollars a year on you know, 100 and something million dollars of revenue. That's a pretty typical story for us and then the final element, 'cause at some point, people do consider selling, either to a private equity or to a strategic buyer, we'll help them with that process, if that's in the cards for them and historically we end up with some really compelling valuations, the last two that we've been involved in I can think of, had a over an 11 times EBTA multiple, which if you know something about the markets, and these were not tech companies, they were normal companies, kind of boring at one level, and they got really, quite amazing valuation, and that's because the people who invested saw a great business model, great talent, great processes, and a really high performing CEO.
Brent:
And I'm assuming that a lot of the work that you do is probably confidential in nature, but are there any, you know, specific case studies that you can give any public details about?
Jim:
Yeah, all of this is done under the veil of confidentiality, so I could talk about one firm, it's mentioned in a book I recently wrote, but he ran a, if I could mention his name, David Phelps of Merlin International. He's changed the profitability of his business materially, but most significantly, one of the big things we're strong on is recurring revenue. Recurring revenue is the gold standard of a quality business that ultimately will get a great valuation and David, through a number of maneuvers and approaches has changed the amount of recurring revenue in his business and he's in the mid 100 to 200 million dollars kind of range, from sort of 10 or 20% recurring revenue to almost 70 or 80% recurring revenue, predictable recurring revenue in his business. That, when comes times to sell this organization and somebody he'll sell, is gonna have a profound impact on the valuation he gets. So, that'd be a pretty typical kind of story. I'd definitely put him in a success story category, but and we haven't had a liquidity event, so I don't what that number's gonna be at, but I'm betting it's going to be a good one when the time comes.
Brent:
You mentioned your book you wrote recently called "Great CEO's Are Lazy", tell us a little bit about that book.
Jim:
Yeah, so, we published this in April, so it's a fairly new book, it's available on Amazon, "Great CEO's Are Lazy" and it's sort of a striking title, but it does go to the most critical thing that a CEO manages, which is their time and there's two components, fundamentally, in the book, and this comes out of our research. We've been working with CEO's for 11 years now, had thousands of CEO interviews, and we work deeply with hundreds and hundreds of CEO's and these are the patterns that we've seen, the really high performing CEO's do differently then the average performing CEO and it's teachable and learnable by everybody, so, one of the sayings we use is taking good CEO's and making them great CEO's, I think if they regularly and uniformly deploy these ideas, it really can move them to the great category. So, the first idea is the idea of the Theory of Constraints. This was developed by a guy named Eli Goldratt, an Israeli physicist, and he applied it, initially to the manufacturing plant, and what he said is, "In every system, in every system you can name, "there's a point in that system "that constrains, that limits the productivity "of the entire system." So the simple example we use is a garden hose. I'm trying to get water out the end of the garden hose and there's a kink in the garden hose, well, everything else in the hose is perfect, except for that one little spot that limits how much water I'm getting out at the end of the hose and so, the other element here, so work that I might do on that hose, anywhere except for the kink, will have zero effect of changing the flow rate in the hose, but if I go and work on the kink, and I open it up, I change the flow rate of the system. Well, a business is more complex than a system, but every business has a kink in the hose. There's some process, there's some element in that business that's stopping it from making more money, or growing faster, or being a better business and so the first question the CEO, the lazy CEO asks is, the diagnostic question of where is the kink in the hose, and it's not easy always, sometimes it's masquerading as one item when it's really another item. It's a talent issue that's masquerading as a process issue, so you have to spend some time understanding that and so that's the first step. Figure out where the kink in the hose is. The second one is to engage. It's like the first concept we teach and it sounds really simple. In fact, I've been criticized, like gee, Jim, this isn't very complex, it's devilishly hard to do and do it consistently and that's why very few CEO's actually do it and perform it regularly.
The next element is you engage in the point of constraint, 30 to 40% of your time. Now, most CEO's peanut butter their time across the business, 10% for this, 10% for shareholders, 10% for employees, 10% for customers, 10% for whatever and that is a formula to never get an interesting result. If you uniformly distribute your time across the business. The way you get a great result is you now distribute your time to the point of constraint, you bust it open, then you go figure out where the next constraint is, and you bust that one open. You have this continual process of figure out where the constraint is, open up the constraint, figure out where the constraint is, open the constraint. If you think about growth curves in companies, they tend to scallop, they kinda go up, then they flatten out for a little bit, then they go up, then they flatten out for a little bit. That flattening out is the constraint in the business coming into play and so our goal is to figure out that constraint before it comes into play and actually slows your growth down, but it open so you can have a fairly consistent, regular case of growth in the business.
We've got a model that's simple to remember, it's five hats that the CEO would play. The five roles of the CEO - architect, engineer, coach, learner, player...
For the next chunk is how do you engage in the point of constraint? We've got a model that's simple to remember, it's five hats that the CEO would play. The five roles of the CEO, architect, engineer, coach, learner, player, those are the five roles, so, when the issue is in the area of the business model, it's the architect hat, it's thinking like an architect, designing the business, how much do we charge, should we charge in a different way? What's our offer to our customers? Are we focused on the right market? What's the margin we should make? How capital intensive is my business? Those are all the kinds of questions that you ask when you've got your architect hat on and I can tell you this hat is maybe one of the most important ones because you get the business model right, life gets easy, and if the business model's wrong, you got a really hard business to run. It's difficult to make money.
Second one is coach, this is talent, finding great people, bringing them onto the business, working with them to develop their capabilities, focusing them on the right issues, that's all coaching, which we know CEO's are supposed to do, but for us, you gotta remember, it's a really high leverage role, it's a great use of your time, 'cause if I invest time in you, Brent, you should be better for going forward, 5% better, let's say, even if I move off to do other work. So, it's an investment that pays back over time, working with people.
The next one's engineer, this is thinking about processes and systems, for example, I'm working with one firm right now that does work in the home, they install fairly sophisticated systems in the home and the question is, how do we deliver a great customer experience every time we go into a home and that isn't casual, there is a system and a process and a methodology you have to develop and training to make sure that happens every time, all the time, so customers leave and they go, "Wow, that was great," so you have to actually engineer the "wow" experience and they're working actively on it, so that's the typical kind of engineer hat job.
once you stop learning, you're done. So, learning is sort of the continuous role that CEO's have to exhibit as they do the job.
Player is the fourth one, this is where I engage in a role, like I'm helping make a sale happen or I'm helping engineer a product, or I'm helping market, or I'm helping, involved in our digital strategy, for example. The key is you always wanna work through and with people, to get those things done and then the final one is learner and good CEO's are always learning. They're kind of thirsty, curious people, trying to figure out what's next and we say this is important because if you're not learning and you're not exhibiting learning, don't expect anybody in your organization to do it. So, once in awhile, we run into a CEO who says, "Yeah, I'm kinda older, I'm not gonna learn anything anymore, I'm pretty well done," I can predict the performance of that business to within two decimal points, zero or negative, because once you stop learning, you're done. So, learning is sort of the continuous role that CEO's have to exhibit as they do the job. So, you look at a great CEO, it's a little bit like, one quarter I'll talk to them, and they say, "I'm totally focused on my "sales compensation issue." They'll come back next quarter and says, "Look, I'm totally focused on solving "my digital strategy right now. "Until I get that right, I'm not moving on, "'cause that's my point of constraint." You come back two quarters later, they say, "Hey, we solved that and now "I got a production problem, I can't deliver "with quality, so I've got to hire people "and improve the processes so I can do it." So, you can imagine that they're constantly moving around the business as the constraint moves. So, that's basically, now you don't need to buy the book, but that's what the book essentially says.
Brent:
So, you describe those five hats, what do you do when you come across a CEO who is maybe, very good at three of those and very bad at two of them? How do you help them become good at all five of those hats that they need to wear?
Jim:
That's a great question, and nobody's great at all five. We're pretty strong on the work with our strengths and forget your weaknesses camp, and I think that's what really high performers do. The first is, having enough self-awareness to realize you're crummy at, let's say, engineering, right? It's just not your thing, and so, in that case, you use talent to solve that problem. You have to find somebody in your organization or outside your organization you can bring in, that's great at what you're bad at. So, first it's self-awareness, and the second is finding someone to help you on the journey, that when the problem is in that discipline that you don't have expertise in, you bring them in and have them help you and so I think you need to be smart enough to ask the questions and understand so that diagnostic phase, to say, this is a systems problem, and I know I'm not great at it, so I need to get, you know, Joe, who's great at it, to come and help me fix this one, 'cause I'm not the guy, but I do know that this is a problem. So, I'd say, get good at diagnostic, but don't have to be good at solving it, and now, if you said, "Look, I'm not "good at any of those five," well, then, we kinda got a problem on our hands, but, if here's one or two, then the answer is, just go get help.
Brent:
Right, right, and so, obviously the focus of this podcast is digital strategy, what do you do to help a business who might have a great product or a great service that they're delivering at a high level, but their digital strategy doesn't present them in the best light possible and they need to go about fixing that? What advice do you give businesses that need to kind of make the external perception match the internal reality?
Jim:
I think we scare people when we talk about digital strategy, 'cause, in this case, marketing is just marketing, and I actually love digital because, as an engineer, my background, the quantification around it is profound. I mean, it's what we wished we always had as we went through other kinds of marketing channels and you can know who your clients are, how many there are, how much time they're on your website, what their engagement level? I mean, it's profound, the data you can find out about people that are engaging with your brand. So, the first is, to make sure that, whatever your brand promise is, you can fulfill it on the backside. So, for example, the customer I'm talking about, a great customer experience, if you're gonna promote that, that you're gonna have a great customer experience, in obvious and non-obvious ways, you better be darn sure that when somebody shows up in their home, that they have a great customer experience. So, the first for me is, make sure your offer, your value for the customer is aligned with your actual delivery. I think that's absolutely super-critical and this is a case where again, self-awareness is critical. You cannot fool yourself and I've seen too many CEO's that sort of believe their own BS, if you will. They say, yeah, we're super great at that, but when you really rack and stack them against competition or best in class, you know, they get about a C minus on their report card and they're just not that good and so, what happens is, you don't grow, because people experience them, they find out it's horrible and they know that it's not a brand they can count on. So, the first is consistency. Whatever you're gonna be good at, be good at it and that's your offer. I think the second one is, you've got to find people that care about that. So, not everybody cares about every offer you can make and here's another place that people struggle is, in order to say yes to, for example, a great customer experience, I gotta go say no to some other things, like being the cheapest, or maybe being the most innovative, super-techie cool design, in exchange for a great customer experience. So, you gotta pick what you wanna do, but more importantly, you have to say no to other things. We find this particularly difficult for people that are in the sales and marketing field because they say, "Look I want to throw the biggest "possible net that I can, to bring in as "many fish as I can and so I don't wanna "say no to any possible venue of competition." So, these are the confused CEO's and leaders. I say, "Well, what is your basis of competition?" They go, "Well, we're the low-cost, high innovation, "customer intimate competitor." That is a unicorn.
Brent:
You can pick two of those things, but you can't pick all three of 'em.
Jim:
Right, exactly right, and preferably one, to be honest with ya, you know, Apple picked one and they did pretty good by picking one. Ritz-Carlton picked one and they were pretty good at it and they're not necessarily concerned about the others. So, I think one is best, two is better, but three is a non-starter. So, once you've got the brand proposition, you can deliver on it and you're clear about who cares about that, the question is, how do I talk to those people most effectively? How do I collect that tribe to my brand, and you know, the good ones, we think, content marketing, it's getting a little overused, but there's still this merit here to build a view that when people are looking for something in your space, you become the reference source. So, I mentioned recurring revenue. If you go and search recurring revenue, which we're very strong on, you'll find a lot of our papers and a lot of our material on it and why, because we wanna, when somebody's thinking about recurring revenue, we want them to think about the Inc. CEO project. So, that'd be a disciplinary, where we are strong on, so we published a lot to try to build a big digital footprint, so when a person is interested in that, will find us and then when they hit the website, it has some conversation about it as well. So, I think that's the next element. Make sure you build a big digital footprint and you own your niche and so, and the targeting ability through LinkedIn, Facebook, as well as other vehicles, is pretty profound. So, for example, when we go to market in some of those spaces, we only talk to CEO's, and we only talk to CEO's of certain size companies, in certain industries, with certain other kinds of dynamics, there's almost no waste in who we're presenting our information to, and we know that those people should care about what we're talking about. So, I think big digital footprint, talking to people, on the people that you really care about and don't waste time on the other ones and being clear that the brand promise is supported by the actual execution. I think those are sort of, it all lines up, if you will. That's be the first level of improvement, I think, that people can achieve.
Brent:
And that's great information, on the opposite side of the coin, where you said, you know, if we promise a great in home or customer experience, we have to make sure that we actually deliver that. So, you know, the idea there is that you don't want to overpromise and under-deliver, but what do you do when you deal with a company that has the opposite problem where it's a great company, great products, delivered well, but their message under-performs what they're actually delivering? How do you help them overcome that problem, 'cause I see that as almost as common or even more common?
Jim:
Yeah, you know, I gotta say, I'd say that's a Mid-West problem because, let me tell you, people from New York don't have that problem. They're very happy to tell you how good they are, but I think there's a, that's a level of humility, organizational humility, that you gotta deal with and so they're just being humble, organizationally, it's a cultural value, that they don't wanna over toot their own horn, they got told not to stand out in the crowd, and so, you know, look, I think you just have to be comfortable, know that you're good, that's the first one, when we're dealing with people like that, a, we have to convince them that they truly are good at what they do and we do run into it occasionally, well, we're just okay, but we have the benefit of talking to hundreds and hundreds of companies every year, we know when somebody's really good and we'll usually call them out, say, "No, no, no, you're not just good, "you're great at that, you're really great at that "and you don't even realize it yet." And so the first is that awareness of understanding they really are good. I mean, you can help them with, look, compare to this experience, or that experience, so it can be a database conversation to prove that they really are better than everybody else and then, you know, that's gotta translate into the marketing and the message, not bragging, you can do simple comparisons, you can just present what you are, no bragging, no over the tips of our skis, nothing that we can't absolutely deliver, but you gotta at least say what you are, because I think if you undersell it, you're missing a huge opportunity to satisfy customers and this is, for me, another element. Look, if there are people that would be genuinely helped by engaging with your company, I mean, you've helped them with better service, more comfortable life, happier family, more entertainment, whatever the things you're selling them is, and you are missing the opportunity to present it to people that really could use it, you're doing your customers a disservice, your non-customers a disservice. Your really kinda, you know, messing them up. So, you have an obligation to make sure that anybody who could use and benefit from what you do, knows about it and understands that you can really help them. Now, then they choose to go with somebody else, I totally get that, but you get at least, from a marketing point of view, I'd say you have an obligation to make sure they know about it and if you are not putting it out there, and not putting it out in enough places, you're not doing your job.
Brent:
Well, I appreciate your time. This has been a fascinating conversation. I know it will be very helpful to our listeners and if listeners what to find out more information about you, where can they find it?
Jim:
The best place to go is our website, incceoproject.com or they can obviously look at my website if they want to look at my background, Jim Schleckser, LinkedIn, either one works great and hope to engage with anybody who's interested and hopefully this was helpful today.
Brent:
Jim Schleckser, thank you for joining us on the Digital Strategy Call.
Jim:
Thank you, Brent.
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